Dry-cleaning, textile rental and facilities management business Johnson Service said it will close 100 out of its 460 dry-cleaning shops by the end of the year.
The group said the shops marked for closure are all loss making. Johnson said it anticipates that the result for the dry-cleaning division for the first half will be below company expectations at the start of the current year.
It will also combine its dry cleaning and textile rental businesses into a single textile services division to try and reduce costs.
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Otherwise the group said overall it remains confident in its outlook over the medium term after a strong performance from its Textile Rental unit and an encouraging performance from Facilities Management. This offset the impact of a like for like sales reduction in the dry-cleaning business.
Johnson said it expects a restructuring charge of around £23.9m for the planned store closures which will be shown as an exceptional item in the second half of 2012.
Of the estimated charge, £3.7m is non-cash and £3.4m is an additional cash requirement relating to the restructuring cost. Johnson does not expect the cash impact of the restructuring to affect the dividend policy or to increase the level of group borrowings significantly.
Net debt at the end of June is expected to be less than £58m versus £49.7m at December 2011.
The group also announced that Chris Sander will assume leadership of the enlarged textile services division with immediate effect. Paul Ogle, currently managing director of the dry-cleaning division, will step down from the board but continue as managing director of the dry-cleaning business within the enlarged division.
Chairman John Talbot said: "We have confidence that our continuing dry-cleaning estate will not only be able to withstand the current retail environment but make a telling contribution to the group's future performance."
"Textile rental and facilities management continue to perform well and, following the integration of the two recent acquisitions, we are very optimistic about the future profitability of the group," Talbot added.
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